The global video game industry has maintained its status as a billion-dollar enterprise for numerous years. In 2022, the revenue from the worldwide gaming market reached an estimated nearly $347 billion USD, with the mobile gaming sector contributing around $248 billion USD to this total. As the gaming landscape continues to evolve, advancements in technology are ushering in fresh prospects for game developers to fashion more captivating and immersive experiences, driven by emerging technologies such as cloud and VR gaming.

Who Holds Sway As The Top 3 In Video Gaming?

The dominant triumvirate in the video gaming realm consists of Nintendo, Microsoft, and Sony. These entities are key players in video game hardware manufacturing and presently dominate the console gaming landscape. Leveraging their infrastructure advantage, the Top 3 stand as major video game publishers worldwide, amassing billions of dollars annually from the gaming industry. Recent data underscores that these major companies collectively command a 29% share of total industry revenue, with Sony boasting the largest market share among these giants.

Prominent Figures in the Gaming Industry

Success in the gaming domain transcends platform ownership. Owing to its triumphs in mobile and online gaming, the Chinese digital giant Tencent ranks among the top revenue-generating companies. Furthermore, Apple and Google, though not traditional gaming entities, derive substantial proceeds from gaming apps via their respective app stores.

High valuation also extends to video game developers and third-party publishers. As of early 2023, Activision Blizzard, renowned for its Call of Duty franchise, holds the distinction of being the most valuable gaming company, with a market capitalization surpassing $67 billion USD. Noteworthy players in the gaming industry include Electronic Arts (EA), Take-Two Interactive, Roblox Corporation, Ubisoft, Embracer Group, and prominent Asian gaming giants such as Bandai Namco, Capcom, Square Enix, NCSoft, NetEase, and Nexon.

Mega Releases and Platform Influence

Major gaming industry names consistently achieve multimillion copies sold and reign over year-end charts worldwide. Notably, the dominance of the Big 3 in scale differs significantly from that of other gaming companies. Several best-selling games globally hail from publishers that aren't platform owners, with the Call of Duty (Activision Blizzard) and FIFA (EA) franchises serving as illustrative examples.

The Power of Gaming Hardware in Market Hegemony

Hardware manufacturers Nintendo, Microsoft, and Sony wield considerable leverage over other gaming companies due to their ownership and operation of key console gaming platforms. The Nintendo Switch, a top-selling gaming console, shares this distinction with Sony's PlayStation 5 and Microsoft's Xbox Series X/S, both released in November 2020, vying for consumer attention. To date, PlayStation 5 has sold nearly 38 million units, while Xbox X/S console sales stand at almost 22 million units.

The competition to entice players to a specific gaming environment hinges on platform exclusivity. Among the highly anticipated 200 upcoming video games from late 2022 through 2024, approximately 115 games were earmarked for PlayStation 5, and an additional 113 for Xbox Series X/S. Regarding exclusivity, approximately 22 games were designated solely for PlayStation, while 26 titles were intended for release only on Xbox, excluding PlayStation. While Sony holds the edge in gaming content revenues, Microsoft is actively expanding its gaming portfolio through strategic acquisitions. Notably, the 69-billion-dollar purchase of Activision Blizzard remains pending regulatory approval as of June 2023.

Deal Dynamics in the Gaming Sphere

The Activision Blizzard deal reflects the ongoing trends in the gaming realm. Given the industry's high consolidation, mergers and acquisitions (M&A) and investment activities experienced post-COVID normalization, culminating in a remarkable 222 M&A deals within the industry in 2022.

Many of these mergers revolve around extending gaming ecosystems. Microsoft's acquisition of Activision Blizzard aims to bolster its gaming portfolio, address criticism over exclusives, and enhance its Game Pass subscription service. Other notable acquisitions signify a direct entry into the mobile gaming sector. Activision Blizzard's success following its 2016 acquisition of King, the creator of Candy Crush, serves as a model for Take-Two and EA, both of which aim to replicate this triumph by acquiring Zynga and Glu Mobile, respectively.

Further mergers center on gaming publishers' desire to expand their reach along the gaming value chain. Companies specializing in game engines and development technology witness substantial investments, with emerging technologies like in-game advertising also gaining financial traction from gaming firms. Epic Games, the creator of Fortnite and the Unreal Engine, experienced a $2 billion funding infusion led by Sony and LEGO parent company Kirkbi. Epic Games and LEGO are collaboratively developing a virtual Lego world.

Gaming Trends in 2023: Cloud Gaming, VR, and Multiplatform Dynamics

Current industry trends encompass innovative technologies for gamers. Could 2023 be the year when cloud gaming attains widespread adoption? Experts hold high hopes, with cloud gaming technologies and services finally achieving mainstream recognition, coupled with an estimated annual market growth rate of 62.5%. Cloud gaming entails game streaming, enabling players to engage in gaming via online connections without necessitating dedicated hardware or local game installations. This shift has the potential to reshape gaming dynamics for those who either lack the means or prefer not to upgrade their gaming hardware regularly to accommodate the latest AAA releases.

A similar trajectory is observed in virtual reality (VR) gaming, with global VR gaming revenues projected to reach $3.2 billion USD by 2024. Despite the associated costs of immersive hardware, the gaming industry continues to invest in VR gaming headsets. Notably, PlayStation VR2, launched in February 2023, garnered nearly 600,000 unit sales within six weeks, positioning it to eclipse the success of VR1.

Furthermore, amid the platform battles for exclusive titles, multiplatform games like FIFA and Call of Duty emerge as major revenue generators. Crossplay titles are increasingly sought after by gamers who employ multiple devices for gaming, with availability across various platforms amplifying audience reach and player engagement. In this realm, Chinese developers like MiHoYo (maker of Genshin Impact) and Hotta Studio (developer of Tower of Fantasy) have raised the bar for multiplayer multiplatform games. Western companies aim to replicate their success by forging strategic partnerships to incorporate Chinese gaming content.

Originally Published By: Statista